What's Building in Home Construction?

U.S. builders aren't overwhelmed with the state of the economy these days, but the new National Association of Home Builders/Wells Fargo Housing Market Index released today, but most of them think things are good rather than poor.

The monthly survey

gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.”

The NAHB said that builders' market confidence for "newly built, single-family homes" was unchanged in November from the prior month, a downwardly revised score of 54.

NAHB Chief Economist David Crowe said in a press release statement that the "fact that builder confidence remains above 50 is an encouraging sign, considering the unresolved debt and federal budget issues cause builders and consumers to remain on the sideline.”

The score has been above 50 for the sixth consecutive month--and the sixth consecutive month more builders have viewed market conditions as good than poor. Before it moved past 50 in June, it last reached that level in April 2006.

The NAHB also reported three HMI index measures,

  • gauging current sales conditions in November, which held steady at 58,
  • a component measuring expectations for future sales, which  fell one point to 60, and
  • a component gauging traffic of prospective buyers, which dropped one point to 42.

Derived from a monthly survey that NAHB has been conducting for 25 years, the HMI takes the scores from each component, to calculate a seasonally adjusted index.

A three-month HMI moving average was mixed--unchanged at 56 and 60, respectively, in the South and West, while the Northeast moved up a point to 39 and the Midwest fell three points to 60.

The results are based on a survey of about 400 NAHB builder-members each month.

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